Leadership is the key ingredient for digital success

With a plethora of Gutenberg moments all at once, no industries are safe from digital disruption. This is not limited to only centuries-old incumbents but also born-digital companies need digital transformation to stay relevant. In order to successfully navigate in an ever-changing landscape, leadership is the key ingredient for success.

A key realization that digital change differs from many traditional change management approaches by representing a continuous state of change rather than a one time transition from A to B and then it’s back to business as usual. This requires leaders to abandon the role as stewards and challenge existing ways of thinking and embrace new methodologies and mindsets to succeed in creating sustainable change over time.

However, organizational change is not a result of technology alone, organizational change is the result of behavioral change at the employees. Underestimating what it takes to implement sustainable behavioral change across the organization is in my opinion perhaps one of the most common pitfalls in when leading through change. Leaders need to acknowledge that behavioral change does not occur in the employees free time and set aside sufficient time and attention to promote the desired change and adjust behavior accordingly. Don’t expect every employee to both deliver on today’s targets and adapt for the future at the same time.

It is widely recognized that change requires employees to learn new skills, but in addition to learning new skills, focus equally on unlearning old habits and obsolete practices. In my many years as a management consultant, the phrase “this is how we’ve always done it” was all too often the go-to explanation for why certain task where performed that way. When challenging existing practices, make sure to identify and break down any informal organizational hierarchy that either knowingly or unconsciously directs a web of resistance to change. In order to separate facts from fiction, always look for the root cause and reason to perform tasks a certain way, and in many cases question why some tasks are performed at all to identify obsolete processes. A five whys approach often used in Six Sigma and Lean processes is a useful tool.

Change management is not only limited to top-level management but needs to be embraced by middle management as well. An important question to ask oneself is whether you have any change agents at the middle management level in place. Change agents are those employees that are passionate about new technology and the opportunities that arise in times of uncertainty. Many start out as digital advocates and, over time, develop into experienced business transformers. They recognize the impact of digital and they’re driven to help their organizations adapt.

These change agents are vital in order to secure sufficient communication across the organization. Change equals uncertainty, and if the purpose or reason for change is not communicated good enough, uncertainty often leads to insecurity among the employees. To succeed with organizational change, communication is key, and this responsibility rests on both leaders and managers across all levels of the organization.

Finally, organizations need to rethink how they approach strategy when facing digital transformation. Traditional industry boundaries are blurry in a digital world and digital ecosystems that are challenging every industry. A platform strategy differs from a product strategy in that it requires an external ecosystem to generate complementary product or service innovations and build positive feedback between the complements and the platform. The effect is much greater potential for innovation and growth than a single product-oriented firm can generate alone. Scale increases the value of a digital ecosystem, helping it attract more complementary offerings which in turn brings in more users and increase the value of the ecosystems. 5 years plans with linear projections are close to useless when facing a world of exponential growth and ever-changing external environments. In times of change, a strategy must be more dynamic and should follow guiding principles rather than detailed balanced scorecard approaches. Both leaders and managers must accept that external change will occur, and yesterdays innovation is the commodity of tomorrow. In order to execute fast enough, decision processes must be agile in order to make tactical choices along the way.

But the most important realization to make when approaching digital transformation is that this is no one-time exercise, but rather the new normal for every company. In a world of perpetual change, it is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change.

One thought on “Leadership is the key ingredient for digital success”

Great blog. I couldn’t agree more. Open Banking is a good example of how interconnectedness is pushing financial institutions to transition from a product to a platform strategy, where value will be created by the interactions between platform participants. The challenge for leaders within these institutions is to navigate this uncharted territory using just a compass, given there is no map.